Stability Pact Suspension, ESM Director Candidacy Discussed at Eurogroup, ECOFIN

On Monday 23 and Tuesday 24 May 2022, Luxembourg's Finance Minister, Yuriko Backes, took part in meetings of the Eurogroup and the Economic and Financial Affairs Council (ECOFIN) in Brussels, Belgium.

At the Eurogroup, the finance ministers of the euro zone first of all had an exchange of views on the implications of the macroeconomic outlook for budgetary policy, notably also following the announcement by the European Commission to extend the suspension of rules of the Stability and Growth Pact until 2023.

Minister Backes said: "The European Commission's announcement to maintain the suspension of the rules of the Stability and Growth Pact until 2023 should not be understood as an invitation to take on more debt or to spend more. Rather, as the Commission itself points out, as a margin of maneuver which should only be exploited in the event of a significant deterioration in the geopolitical situation and economic conditions. It is imperative that a return to more balanced budgetary trajectories be initiated to ensure the sustainability of public finances in the medium term.”

The vacancy for the post of Director General of the European Stability Mechanism (ESM) for which the former Luxembourg Finance Minister, Pierre Gramegna, has applied was also on the agenda of the Eurogroup. Despite the fact that a consensus on the succession of Klaus Regling has not yet been reached after two indicative ballots, the consultation between ministers will have made it possible to reduce the number of candidates from four to three following the withdrawal of the candidate from the Netherlands. Additional consultations will take place in the coming weeks with a view to finding a consensus by the annual meeting of the Board of Governors of the ESM in Luxembourg on 16 June 2022.

Ministers also continued, in an inclusive format, their discussions on the development of a roadmap for the completion of the Banking Union.

At the ECOFIN Council, the 27 ministers of the European Union had an exchange of views on the economic and financial aspects linked to the war in Ukraine. Ministers took stock in this context of the implementation of European sanctions against Russia. They also looked at financing needs and the necessary medium-term reconstruction effort in Ukraine. Finally, the ECOFIN Council addressed the implementation of the Recovery and Resilience Facility, following the "REPowerEU" initiative launched by the European Commission with a view to accelerating the energy transition and the exit from dependence on Russian energy products.

On the sidelines of the Eurogroup and ECOFIN meetings, Minister Bakes had bilateral meetings with her Belgian counterpart, Vincent Van Peteghem, the Italian Minister of Economy and Finance, Daniele Franco, the new Polish Minister of Finance, Magdalena Rzeczkowska and Bulgarian Deputy Prime Minister Assen Vassilev.